I cover technology, entrepreneurs, billionaires and VC's for Forbes. When I get the chance I write about lifestyle and booze too. Previously I edited Forbes's front-of-the-book section "Leaderboard," and was a proud member of the Forbes 400 Wealth Team. Before that I worked on Wall Street. Feel free to follow me on Twitter: stevenbertoni and subscribe to me on Facebook.

While Icahn’s reemergence has taken Wall Street by surprise, it’s actually the result of five years of careful planning. Icahn had spent the 2000s making hundreds of millions of dollars the new-fashioned way: creating a hedge fund structure, so that he could invest his own money alongside people willing to give him 2.5% of their investment, plus 25% of their profits, for the privilege. By 2007 he was managing as much as $5 billion in outside capital from endowments, pension funds and even a Middle Eastern country. It worked wonderfully until his funds lost more than 35% of their value during the economic meltdown. Suddenly, like most fund managers, he faced disappointed investors and let cash-strapped partners redeem their funds.

Photo: Jonathan Kozowyk for FORBES

Instead of scratching back his assets under management, Icahn cut himself loose from the burden of limited partners entirely. He returned the remaining $1.76 billion of outside capital in his hedge fund in 2011. “I never had a problem with my investors,” says Icahn. “But in the end there were too many conflicts when you wanted to buy a hundred percent of a company.” Rather than be a fee-earning fund manager, he would reboot as a lone wolf, armed with a jumble of personal investment pools commingled with the funds of his publicly traded vehicle, Icahn Enterprises LPIcahn Enterprises LP. (The public company, of which he owns over 90%, holds $24 billion in assets, including majority stakes in eight companies, such as auto parts maker Federal-Mogul.)

Over the past four years Icahn’s investment funds have outperformed the S&P 500 Index, averaging returns of more than 25% a year, a feat few hedge fund managers can claim. He’s off to another good start this year–with his investment funds up 12% through Mar. 13. More impressive, Icahn claims his portfolio has largely been hedged in the last few years–his stock holdings offset by large short positions of the S&P 500 Index. At the same time, Icahn Enterprises has outperformed the U.S. stock market over the same period. As a result, Icahn, who was worth perhaps $9 billion at the bottom of the market, has quickly doubled up.

That brings us to today. With no one to answer to except himself, Icahn is unleashed. He has never had so much cash. Nor have the balance sheets of corporate America. This confluence translates into Icahn’s recent fox-in-the-henhouse antics, as he’s now perfectly positioned to wield his fear-inducing brand of activist investing–shaking up companies by snatching up their publicly traded stock, grabbing board seats and demanding they do something with their cash.

“He has the guts to do things in size and make big bets, and, frankly, he has more money now than ever,” says Keith Meister, a former Icahn lieutenant who now runs his own $2 billion-plus hedge fund. “Activists have become cults of personality, and there is no one bigger and better than Carl in that world.”

Icahn says he respects the new breed of activist investors like Meister, Daniel Loeb and Barry Rosenstein. (“Good guys,” he calls them.) But what separates him is that they run money that can be recalled by their investors. Icahn, by virtue of his postmeltdown revamp, wages proxy battles and issues tender offers with so-called permanent capital–money under his complete control. And given how large that permanent war chest is, he can target companies previously thought unassailable. “Right now,” says Icahn, waving around an aluminum ruler like a cavalry saber, “without selling anything, we can write a check for about $10 billion.” With that kind of ammo Icahn can take on a cash-rich company with a market cap of as much as $50 billion.

That puts Dell, the world’s third-largest personal-computer maker, in his sweet spot. In February Michael Dell seemed to have an unimpeded way to regain control of the company he had founded in his college dorm room, working with private equity firm Silver Lake on a $24.4 billion deal to take Dell private for $13.65 per share, a 25% premium over its recent trading price.

Icahn read about it in the newspaper, and he swiftly took a $1 billion position in the stock, figuring that if Dell was putting so much money in, it must be really cheap.

By early March Icahn had concluded that Michael Dell’s bid did not reflect the company’s stated 15% internal rate of return on its $13.7 billion of infrastructure technology acquisitions. So he implored shareholders to force the company to scrap the deal and instead pay $9 per share in dividends using its own cash and new debt.

By the middle of the month Icahn was pondering a more forceful tactic, mindful of the fact that the company’s founder had already established a floor. And toward the end of the month he notified the special committee of Dell’s board of directors that he was interested in buying control of the company. A bidding war between him, Michael Dell and the Blackstone Group private equity firm is expected to play out over the next weeks. Given Icahn’s big bet, he almost certainly wins even if he loses.

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Carl Icahn’s interest in Dell is as brilliant as his investment in XO Communications and Concentric Cloud Services. The real value in Dell is in its blade server business. If Dell restructures it’s enterprise business unit to focus on Data Center Virtualization solutions enabled by VMware, XEN, and, perhaps most importantly, OpenStack, sky’s the limit on future revenue growth for the company.

Dell would also be smart to partner with EMC and Netapp to develop pre-integrated data center solutions for commercial, mid-size, and enterprise customers who do not require super high-end, super high cost virtual data center tecnologies such as VMware Cisco EMC (VCE) vBlock data centers.

Thanks for reading. I agree it could be a very savvy move. Icahn thinks Dell’s $13.8 billion investment in cloud and enterprise business hasn’t hit the top line yet. If it does, Icahn is in for a big payday–that is, if he wins it.

I have the deepest respect for the plain spoken Carl Icahn. With humor and fond remembrance of some of the great Take-Over genius individuals, I had a vision. Carl Icahn in Jeans, t-shirt and sneakers next to Henry Kravis with his perfectly quaffed suit standing next to each other smiling! Two greats of that business!

jcgonzmo — thanks for your comment. I would not call Icahn hated. In fact I think he has a strong following on the Street–especially by shareholders in companies like CVR energy and Chesapeake, Icahn made them all a lot of money.

I love Icahn. He stands up for what is right. When Ackman, who is disseminating false information about a legitimate company – Herbalife, that sells real products to real people who love those products, just so he can cover his subpar track record and profit from his reckless short sale, Icahn brings true back. Ackman has blatantly manipulated the stock of Herbalife by having the attention of the media and knowingly giving false information just to drive the stock down. This is totally unethical. This is why I love Icahn because he sees the unjustice and is proceeding to right this injustice.

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I have never followed Icahn, or for that matter, any of the “take ‘em down and out” type of investors……until now. Article was very enjoyable, as well one of the previous reads offered on Icahn. Excellent portrayal of the “half-truths” common of the blood sucking and letting in Corporate America.

I think it is so funny when people write self righteous rants. You have it all figured out Kathy, right? Here is a little bit of reality for you to meditate on. These people are smarter than you will ever be in ten life times. Their deep intuition of commerce, business, and the movement of money eclipses your meager adolescent analysis of “how a money making enterprise should be run.” I would go to your column and pontificate about what kind of person you are, even though we’ve never met, but I found out that you weren’t important enough to have an article written about ‘you.’ Go figure. Get back to your dull unproductive life and stay out of business column with this garbage.

Someone had a bad day….I don’t see what was so self-righteous about Kathy’s comment. Icahn seem like a “cool guy” who’s out to make money in a way that makes money for the little guy too, but there are a lot of other investors of his type that are not nearly so saintly.

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I’ve never been a real fan of Dell but it’s a real shame its coming down to this. An LBO by Icahn or anyone else for that matter is a death knell for the company. How many people will be put out of work in the inevitable layoffs that will happen to help repay the debt incurred to buy out Dell? An LBO will simply accelerate the downward spiral that MD was trying to stop and reverse.

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